Rogers deals a huge body blow for Canada’s largest sports network with 12-year, $5.2-billion deal for NHL rights. Read on

The company announced Tuesday it has secured the broadcast and multimedia rights to all national Canadian NHL games for 12 years, an agreement that will begin in the 2014-15 season and continue until 2025-26.

The deal will see Rogers pay the NHL annual payments beginning at about $300-million in the first year and, with gradual increases, culminating at $500-million in the final year of the contract.

Those payments, along with an initial $150-million spread out over two years, will total about $5.2-billion, Rogers said in a statement.

Locking up all-platform distribution rights for the long term . . . is a huge coup for Rogers

Market reaction to the deal was muted. Rogers’ stock was trading down 0.9% at $43.36 Tuesday afternoon.

In recent years, Rogers has invested heavily in its Sportsnet properties – including television networks, radio stations and a magazine – to challenge the once dominant BCE Inc.-owned TSN.

Rogers and BCE both own equity stakes in Maple Leaf Sports & Entertainment, which owns the Toronto Maple Leafs hockey team as well as other sports assets.

BCE said in a statement Tuesday that it submitted a bid for the NHL rights that was “appropriate” for its business and that it believed was of value to the league.

Despite being outbid by Rogers, the company said its commitment to hockey would not wane.

“In hockey, our partnerships with the Leafs, Jets, Canadiens, Sens, and Hockey Canada (including the World Juniors) remain core to our TSN and RDS TV, radio and digital properties,” the statement reads.

“Sports is the most important content by far,” said Greg MacDonald, an analyst with Macquarie Capital Markets Canada. “Locking up all-platform distribution rights for the long term in a [net present value]-positive deal is a huge coup for Rogers.”

The NHL said in a statement that the agreement is the largest media rights deal in its history and one of the largest media rights deals ever in Canada, including the largest-ever sports-media rights agreement.

Rogers said it expects the deal to be immediately accretive to its media division’s operating profit. It will recoup some of the payments from CBC and Quebecor Inc.’s TVA network, which have negotiated sub-licences.

CBC will hang on to the iconic Hockey Night in Canada broadcast on Saturday nights and for playoff games including the Stanley Cup final and TVA will have broadcast and multimedia rights to French-language national games.

CBC said it is committed to 320 hours of prime-time NHL programming for the next four years.

Sports content is prized by media companies because of the value of watching the events live and hockey holds a special place in Canadian hearts.

RBC Capital Markets analyst Drew McReynolds noted that Tuesday’s agreement is consistent with Rogers’ approach of focusing on sports content and yet sharing the risk with other broadcasters (CBC and TVA in this case).

“With exclusive rights across all platforms, we believe this agreement can also meaningfully advance the company’s multi-platform strategy,” he said, adding it will have, “spillover benefits for the cable and wireless segments in what is to become an era of increased cord-shaving and cord-cutting.”

In addition, since Rogers will broadcast some games on CityTV, analysts said that could ease some of the costs it pays to run Hollywood content on Saturday nights.

Canaccord Genuity’s head of research Dvai Ghose said while the fees appear high, “the deal should be profitable due to advertising and resale to CBC and TVA,” adding he expects 60% to 80% of the costs to be recovered through resale agreements.

With the federal government looking at “unbundling” cable packages, Mr. Ghose said the NHL agreement could be an advantage for Rogers and its networks.

“The deal could put Rogers Media in a better position if a la carte mandates are introduced by the government, given the ‘must watch’ nature of the NHL for many Canadians,” he said.

The deal is still subject to the approval of the NHL’s Board of Governors, which is set to meet from Dec. 9 to 10.